Assessing the mental health implications of carbon trading policies: evidence from urban China

Pengpei Liu, Xuelei Yang and Xingrong Liu ()
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Pengpei Liu: Southern University of Science and Technology
Xuelei Yang: Northeast Forestry University
Xingrong Liu: Lanzhou University

Palgrave Communications, 2025, vol. 12, issue 1, 1-13

Abstract: Abstract Despite robust evidence demonstrating its efficacy in reducing carbon emissions, the impact of carbon emission trading (CET) policies on mental health remains largely unexplored. Based on a difference-in-differences methodology, this study uses the four waves of 2011, 2013, 2015, and 2018 of the China Health and Retirement Longitudinal Study (CHARLS) dataset to ascertain the causal effect of introducing pilot CET schemes on depression among middle-aged and elderly individuals in urban China. The findings reveal a significant increase in the risk of depression following policy implementation, with varying effects observed across demographic groups and regions, especially among older adults and relatively higher socioeconomic status. Furthermore, a mechanistic analysis suggests that immediate word recall, a measure of memory deficits, serves as a mediator in the relationship between policy implementation and depression, while stressful life events exacerbate the policy’s impact. The study concludes with several recommendations aimed at mitigating the unintended mental health consequences associated with the implementation of similar policies.

Date: 2025
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DOI: 10.1057/s41599-025-05171-6

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